Cash Waqf in Action: A Model of Community-Driven Success

A case study presented in the

Endowment (Waqf) Conference 2025 by IRUSA in Partnership with USCMO

 

How to make the economy Free of Riba and Poverty

Muhammad Fahim Khan[1]

 

The economy of Pakistan is dominated by a handful of families who have access to the financial market, enabling them to acquire substantial capital.  The rest of the families remain dependent on these elites to employ human resources as wage/salary slaves. Pakistan’s economy has been operating in this manner since its independence, 78 years ago, when approximately 20 families dominated the economy.

Pakistan now has 150 million human resources, 75 million are working as wage slaves or salary slaves, and the rest of the 75 million are sitting idle, living a starving life, waiting for the elites to make the economy grow and create jobs for them. Pakistan is not an exception. Economies of all developing countries, Muslim or non-Muslim, are working this way. This is due to the financial system that now governs the economy worldwide.

Credit created by the banks is given as a loan at interest to the most creditworthy individuals selected by the bank from the wealthiest families.  This is a Riba-based system that facilitates the circulation of financial resources, thereby promoting economic growth at the macro level. In contrast, at the micro level, hunger and poverty continue to grow.

A few elites make banks. Banks then make a few elite capital owners.  They create credit by keeping in reserve the deposits that people make, which are spare with them and would hardly withdraw them. The few owners thus make the growth in the economy of capital owners, many of them will be the owners of the bank as well., The growth in their business leads to increased employment. Increased employment leads to a greater flow of deposits into the banks.  Banks create more credit.  That is how financial resources circulate in the economy, and that is how the economy continues to prosper in terms of national income, called GNP.

This financial system and economic system created by it contradict the economic principles outlined in the Quran and Sunnah, which governed the economy in the State of Madinah from the 7^th century until the fall of the Khilafat-e-Osmania in the 17^th century. The financial system everywhere contradicts Islamic rules for finance.

a)       Economic growth requires financial resources (not human resources)

b)       Capital can be provided by creating loans (credit), eliminating the need for household savings.

c)       Loans can be given only at interest for a stipulated period determined by the bank.

d)       Only high-net-worth individuals can get the loans to make the economy grow

The Quran and Sunnah guide us to achieve economic growth

a)       Economic growth requires entrepreneurship of human resources, not of financial resources.

b)       Capital is made from savings that families make from Rizq (the Quran 2:219), not by creating credit.

c)       The loan must be Riba-free; Focus strictly on fulfilling the need rather than on recovery.

d)      Everyone can access loans to help grow the economy, the poor first.

 

 

 

 

How to make a Riba-Free economy grow better

 

Create Islamic banks with four Islamic features to compete with Riba-based banks? Apparently, a Mission Impossible. The Islamic banks created by Sharia scholars could only partially show feature (c).

 

Mission Possible is: Give al-afw to a Waqf bank and create Riba-Free credit for the poor first from the income that Waqf banks create from the Awqaf properties that Waqf banks use for building and see how al-afw credit starts going from poor to the rich, making the economy grow faster than Riba banks could even imagine.

 

Mission Possible:

Theory is simple and can be proved mathematically and graphically, but I prove it from a story of a tiny village in the valley of Kashmir, about which the poet said

“Gar Firdaus bar roo-e zameen ast, hameen ast-o hameen ast-o hameen ast”

“If there is a paradise on earth, it is this, it is this, it is this“

گر فردوس بر روئے زمین است

ہمن است و ہمیں است ہمیں است

 

This village, with about 50 impoverished families, had a small madrasa (Islamic school). Its manager, Maulana Zareen, happened to meet someone who knew about his social work, and he was asked to make two skill centers: an IT center for boys and a sewing center for ladies.  The center charges 10$ per student, and Zareen asked his contacts for a donation as Sadaqah.

 

When the thirty students graduated, Zareen advised them not to seek traditional employment but to leverage their skills as a business, assuring them that they could secure startup capital to launch any venture. Some of them asked for money to buy some tools. No one asked for more than $10. The total loan amount is $200. This was given as a loan to be paid when they can earn from their business. Recovery was not the target. Success was the target.

 

Zareen gave the following report to his friends who helped him make this story a success:

 

“Thank God, today on January 15, 2025, the Jamil Khan Skill Development Center in Barri Bandi, Chitral, Topi, Azad Kashmir was inaugurated, where 20 students have enrolled to take a 3-month electrician and plumbing course. Previously, 56 students completed a computer course, 12 students completed an English language course, and 70 women completed a sewing course at the Jamil Khan IT Center. For this, we all express our gratitude to Allah Almighty. We also sincerely thank all friends who arranged these courses for the poor and deserving individuals in this remote and underdeveloped area so that they can learn skills, start their own livelihoods, and rise out of poverty. May Allah bless all of them.

 

Zareen says, “to provide skill to human resources of impoverished families in the community of his mosque and madrasah is his secondary objective, his primary project is ‘no human resource should remain unemployed or sit idle just because he does not have any skill or does not have an access to start up capital. People who are well-off should spare money that in their hand after meeting their needs (al-Afw) spend it on those who illiterate unskilled human resources in a way in order to them get out of poverty trap”.

 

With this objective, Zareen had made the and furniture and tools that he received from his contacts as Waqf to be maintained for all time to come to give training to poor girls and boys on the two skills. Stitching and designing on sewing machines and graphing and designing on computers. His project thus made a success with two types of resources.

a)       Sadaqaat or Infaq (also called Charity) with which he paid fees of students and salary of teacher.

b)      Tools, machines computers are Waqf with which he gives trainings

 

 

This success motivated the mosque in the nearby village joined to do the same for its community.

 

On May 1, 2025,  Zareen reported “Thank God, today the closing ceremony of the electrician and plumbing course was successfully held at the Jamil Khan IT and Skill Development Center in Barri Bandi, Chitral, Topi, Azad Kashmir. On this auspicious occasion, all participants who completed the course were provided with toolkits related to their skills so that they can practically implement their skills and earn a respectable livelihood, paving the way for self-sufficiency.

 

Thank God, so far, from the Jamil Khan IT and Skill Development Center and the Sewing Center:

– 56 men and women have completed the computer course.

– 16 individuals have completed the electrician and plumbing course.

– 12 individuals have completed the English language course.

– 114 women have completed the sewing course.

 

Furthermore, up to now, 46 sewing machines, 2 laptops, and 16 toolkits have also been distributed among the participants.

 

All of this has been made possible by Allah Almighty’s grace, His support, and the assistance of compassionate helpers. We are grateful to our Lord for granting us the opportunity to perform this good deed. May Allah accept our efforts in His presence and reward all the helpers with goodness. Ameen.”

 

 

“This work started in a village in Kashmir with a donation of three hundred thousand rupees ($1000), which was received through a request on WhatsApp. From this, an IT center and a sewing center were established, and it has been dedicated to a mosque. The mosque’s administrator and a teacher of computer science are using it to improve the prosperity of their area. Observing this work, more donations are coming in, which will enable them to build a shop. The income generated from this will uplift more poor people in the region. The cycle of donations will continue, and the assets for increasing income will keep growing. Poverty will gradually decrease, and the poor in other areas are getting opportunities to acquire skills. Those who were illiterate and unskilled in impoverished families are now getting chances to start their own businesses. The area is now on the development path.”

 

The Model

 

Understand two aspects of this model:

First aspect: The Model

1. It is a model of Charity and Endowment, and making income from Endowment to remove hunger, illiteracy, and poverty from a community within a year   

 

The model is: Convert any money donated as charity into a Waqf (endowment), for providing a capital in perpetuity for a sustainable source of income. The purpose of this income is to improve the economic condition of the community.

 

2.  It is of model of the entrepreneurial effort of Mosque/School to remove illiteracy, hunger and poverty. It is a gift of the Quran to humanity. Understand Surah Ma’un and verse 219 of Baqarah and Verse 60 of Surah Tauba. 

 The model is: The charity is an endowment, a Waqf, and connects it to a mosque or school, from where business-minded people and volunteers take an initiative together for the welfare of the community by improving the well-being of everyone. There is no shortage of volunteering spirit to donate entrepreneurial effort and the humane spirit of donating the spare money (al-Afw) to help deprived people in the community to live and thrive by giving them

 

A)      Functional Literacy and Skill Training to help the poor move towards self-sufficiency.

B)      Interest-free Loans or risk-bearing capital from the money people are willing to spare

 

  It is an institution that people can develop when people of the community get together five times a day, in general, and on the afternoon of every Friday, with a volunteering spirit to cooperate with the spirit of improving the welfare of the community around the mosque.

 

3. It is a model of Sustainable Development 

 The Model: Make Sadaqaat and Infaq a capital in perpetuity, making income from the waqf charity to keep growing as contributions to the endowment (Waqf property) keep continually increasing, continuously reducing illiteracy and unemployment, and hence continuously improving the economic and social welfare.

 

6. It is a model of Peace and Prosperity growing together.

 The growing income from the endowment and the benefits derived from the ever-increasing prosperity bring peace and harmony to grow continuously. See what Surah An-Nahl, Verse 112 describes Allah’s mercy and blessings on the community that follows Allah’s guidance.

 

Second Aspect: Sources

This model has no worry about financial resources for achieving all that a community may need for social welfare and economic development in the community. Financial resources will come from surplus funds that remain idle in banks and serve no purpose for the community except creating credit for a few elites in the country.

 

This model gives opportunity for Sadaqaat and Khairat to go where they are most needed, it presents an excellent chance to participate in something that will yield the most certain rewards that will keep accumulating for life after death from the benefits that their Sadaqaat will keep making forever when they are devoted to waqf as a Loan to Allah.

 

The sources of this model are not merely the Sadaqaat that people do in their lives but also the resources that will give Sadaqaat that people will coming from the resources that people will donate from the inheritance. People can donate up to one-third of their inheritance to the waqf that is made for making institutions of education, health, and the environment.

 

The most important source for this model, however, will remain in donating cash for waqf. Look at the announcement Zareen made for a donation after successfully experiencing the outcome of his efforts.  

 

Zareen sent all potential donors following request through WhatsApp for donating cash in whatever amount they can, that he will not spend it but will put it as a loan to Allah in such waqf property that will keep creating income. This will keep him extending his project beyond his community. Here is what he told his contacts.

 

“A Revolutionary Model to Eliminate Poverty and eliminate Riba as well: A Journey Towards Shared Prosperity by giving knowledge, skill and talent to the extreme poor from Sadaqah and waqf (Charity and Endowment)

 

This model, which began with just three hundred thousand rupees in charity ($1000 donation) in  a village in Kashmir called Chitra Topi Bagh, has now become a means of economic self-sufficiency, educational and skill development, and poverty alleviation throughout the region. The funds were collected through WhatsApp and were utilized for two key projects: 

1. An IT and Skill Development Center 

2. A Sewing Center 

Both of these centers are linked to a mosque, and the mosque’s administrator, imam, and volunteers have embraced this effort not merely as religious services but as a responsibility for social welfare.

 

Foundations of the Model: 

1. Sadaqah-Waqf (Charity-Endowment, converted into and Income-Generating Assets:

This model converts Sadaqah (charity) into a sustainable source of income. Building a shop, an IT center, and a sewing center created from charitable donations became an endowment (Waqf). The income generated from these waqf properties is used for welfare activities and reinvested into welfare activities as well. This creates not only knowledge, skills and talent to the underprivileged human resources but also provides them earn income to prosper with dignity instead of spending all life in seeking employment only to become a wage slave.

 

2. Leadership Connected to Mosque and School (Madrasah):

The imam, educators, economic planners and policy makers, and other conscious volunteers and community leaders can make such model in practice to make their country free of Riba, hunger poverty and exploitation (Zulm). The mosque is a place where people can solve all such economic problems that market cannot solve. Mosque and School (Madrasah) are place like market; Market is a place where people come to find how to improve economic well-being. Mosque and School are a place where people can come to improve social, moral and spiritual well-being.

 

3. Knowledge, talent, Business Training: 

 Community leaders and volunteers when they speak and give time in the mosque, they can use this opportunity to give knowledge, talent, business skills to the deprived people in the community because they too come to the mosques and school to spend time. Mosque and Madrasah thus can be made a community center as well where after worshipping they can make some community work also, like knowledge, talent and training and providing interest-free financial

 

4. Continuity of Sadaqaat (Growth in income from Investment in Awqaf o-generation Asset Growth:

 Once charity is transformed into an asset (like a land, or building, or a grocery shop or a training center), it becomes a consistent source of rising- income. Seeing this, more people are encouraged to give charity or making there on Awqaf properties.

Awqaf Assets increase, income rises, poverty decreases, and prosperity follows.

5.  Power of Sadaqah in Killing Riba best lending 

Banking is an institution that is increasing the power of Riba to kill humane feelings in mankind.  The Waqfing is an institution that has been increasing the power of Sadaqah to kill devilish tendency giving loans. (The Quran 2:276). This institution was killed when colonialization of Muslim world. Mosque and Madrasa program to use al-Afw and waqf to revitalization of the institution of Waqfing that prevailed all over the economy in Muslim world during 1000 years since the establishment of state of Min 7^th century.   The difference now is that up to 17^th century people were waqf what they were savings for investment. People liked to waqf some of the savings they that they intended to invest. Now, from the Rizq in 21^st century, people like to waqf what remain surplus funds which they keep in hand or in bank but remain un used for meeting their consumption needs or investment needs. al-afw resource is now being wasted and the institution of cash waqf will make this resource to be

   – Become a continuous source of rewards in Akhirah

   – Providing benefits even after death 

   – Serving as a means of social revolution 

 

 

Cash for Waqf[2]

 

Zareen made a request on WhatsApp seeking cooperation from friends for the development of a Cash-Waqf (an endowment established through cash donations). “Donate any amount you wish for this cause. Your support for this cash endowment will, Insha ’Allah (God willing), remain in the waqf property until the Day of Judgment, just like the Waqf of Uthman ibn Affan (may Allah be pleased with him). Our goal in creating this waqf is to use all income generated solely for human resource development and for providing Riba-free loans or profit-sharing capital to entrepreneurs. This will give an opportunity to anyone to develop his/her own businesses, at her own home or in the locality rather than waiting at home or on the streets for wage-paying jobs.

 

Zareen further explained, “By establishing this cash waqf, we aim to create a financing company that provides Riba-free financial support for business activities that promote community development. We have already applied for registration with the Securities and Exchange Commission of Pakistan (SECP) as a Riba-free financial company under the name Jamil Khan Welfare Organization. With the support of Sadaqaat, we have established an Awqaf property. Soon, we will request donations to expand this property and further enhance its income-generating capacity. Our skill training centers admit unskilled individuals and provide them with training, culminating in government certification from the Technical Education and Vocational Training Authority (TVETA) upon successful completion.

 

This waqf financing company now working as Jamil Khan Welfare Organization registered with SECP and receiving donations. This is its current announcements.

 

 

 

A Step Towards a Strong, Organized, and Interest-Free Welfare System!

 

This group is not just formed for temporary relief; rather, its aim is to establish a robust, regular, interest-free, and effective welfare system that is not confined to immediate aid but continues until the Day of Judgment.

 

Here, not only will the immediate needs of the needy, impoverished, and orphans be met, but individuals who have the potential to stand on their own feet through hard work will also:

– Be taught skills,

– Be provided with interest-free capital,

so that they can achieve self-reliance with dignity and respect.

 

This initiative is a historic step towards laying the practical foundation for an interest-free economic system in the country, with the permission of Allah Almighty.

 

Policy for the Use of Donations

 

– Donations of less than 30,000 Pakistani Rupees (100 USD): These will be used immediately to assist students and families suffering from hunger.

– Donations of more than 30,000 Pakistani Rupees: This will be considered a loan given to Allah (in Islamic terminology, Waqf) until the Day of Judgment. This amount will not be consumed but but will be transformed into an asset within six months that generates a sustainable income; only income generated by it will be used to fulfill the objectives of the Jamil Khan Welfare Organization.

– Inheritance as Donations: Those who wish to donate a part of their inheritance will have their donations accepted, viewed as a loan to Allah, after completing the necessary legal procedures.

 

Quranic Guidance for this donation

 

يَسْأَلُونَكَ مَاذَا يُنْفِقُونَ قُلِ العَفْوَ﴾

“(O Prophet!) They ask you what they should spend. Say:(العَفْو ‘Whatever is beyond your needs).’

(Surah Al-Baqarah: 219) 

 

Spending what remains after fulfilling basic needs in the way of Allah purifies the heart, blesses wealth, and fosters social justice.

 

﴿وَتَعَاوَنُوا عَلَى البِرِّ وَالتَّقْوَى وَلَا تَعَاوَنُوا عَلَى الإِثْمِ وَالعُدْوَانِ﴾ 

“Help each other in good deeds and piety, but do not assist one another in sin and transgression.”  (Surah Al-Ma’idah: 2) 

 

Our model is based on collective goodness, trust, and transparent collaboration; complete avoidance of interest, oppression, and unlawful means is required.

 

 ﴿يَمْحَقُ اللَّهُ الرِّبَا وَيُرْبِي الصَّدَقَاتِ﴾ 

“Allah erases interest and increases charity.”  (Surah Al-Baqarah: 276)

 

﴿يَا أَيُّهَا الَّذِينَ آمَنُوا اتَّقُوا اللَّهَ وَذَرُوا مَا بَقِيَ مِنَ الرِّبَا… 

“O you who have believed! Fear Allah and give up what remains of interest…”

 

 

A large mosque and madrasa affiliated with a major religious party have been closely monitoring the activities of a small mosque in a tiny village in the Bagh district, Azad Kashmir. Noting the smaller mosque and madrasa’s success in registering a waqf company with SECP, the administrator of the larger madrasa contacted the same donor, seeking support to replicate this achievement on a broader scale. Here is their proposal in a nutshell.

 

They want to make a small polytechnic institute to start giving practical training in more than two skills to develop a talent that is most needed in the locality of the district Bagh. The Madaras is registered as a waqf for the workforce, leading to diplomas, certificates, and applied degrees. The Madrassah asked for seven computers and $2500/- to purchase tools, equipment, and machines required for training different schools. Their objective is to extend this program not only in their Madrassah in Bagh District, but will soon do the same in two other central districts in Azad Kashmir.

 

This acceptance of a Cash Waqf-based financing company by a major religious party and the readiness of a big religious party to make the financing company Riba-free to give Riba-free loans to impoverished families bring hope that a clear model of a real Riba-free bank will soon become available.